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Job Gains Were Surprisingly Good Last Month

The economy produced 128,000 in October, according to the Labor Department’s latest report. This surprised…

  • November 14, 2019

The economy produced 128,000 in October, according to the Labor Department’s latest report. This surprised analysts, who had expected just 85,000. Needless to say, this was a pleasant surprise.

The unemployment rate was little changed at 3.6 percent. Notable job gains occurred in food services and drinking places, social assistance, and financial activities.

Within manufacturing, employment in motor vehicles and parts decreased due to the GM strike. Federal government employment was down, reflecting a drop in the number of temporary jobs for the 2020 Census.

Both the unemployment rate, at 3.6 percent, and the number of unemployed persons, at 5.9 million, changed little in October. The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 1.3 million in October and accounted for 21.5 percent of the unemployed.

The labor force participation rate was little changed at 63.3 percent in October, and the employment-population ratio held at 61.0 percent. Both measures were up by 0.4 percentage point over the year.

In October, 1.2 million persons were marginally attached to the labor force, down by 262,000 from a year earlier. These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months.

They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

In October, average hourly earnings for all employees on private nonfarm payrolls rose by 6 cents to $28.18.

Over the past 12 months, average hourly earnings have increased by 3.0 percent. In October, average hourly earnings of private-sector production and nonsupervisory employees rose by 4 cents to $23.70.

What to Make of This

This report shows a U.S. economy that is resisting the pull of recession better than many economists expected. And make no mistake, there is a pull toward recession from the combination of a slowing global economy, the effects of tariffs and a related downturn in manufacturing.

In fact, the manufacturing sector contracted for the second straight month in October. The GM strike was a contributor to this pullback, but we also have the slowdown at Boeing due to the ongoing problems with its 737 Max program.

In addition, many manufacturing executives are feeling the effects of ongoing U.S./China trade dispute. Manufacturers are seeing higher costs from tariffs, and there is uncertainty in the sector.

Business and consumer confidence have taken hits across the board, and this has shown up in slowing sales of new vehicles and homes.

Job growth has averaged 167,000 per month thus far in 2019, compared with an average monthly gain of 223,000 in 2018. Clearly, the economy needed a boost in job gains this fall, and it got it, (at least for October).